60-day extension to make a late GILTI high-tax exclusion election for a group of controlled foreign corporations

Plain-English summary

A U.S. corporation that heads a consolidated group owns a group of controlled foreign corporations (CFCs). Under the GILTI rules of section 951A, a U.S. shareholder must include a CFC's income in its own taxable income, but a "high-tax exclusion" election lets the shareholder leave out foreign income that was already taxed abroad at a high rate. The company intended to make that election for two tax years and prepared its returns as if it had, but its outside accounting firm forgot to attach the required election statement to either return. The omission was caught during a third-party due diligence review, by which point the 24-month window to fix it by amended return had already closed. The company asked the IRS for relief under Treas. Reg. §§ 301.9100-1 and 301.9100-3 to make the elections late. The IRS found the company acted reasonably and in good faith by relying on a qualified tax professional, and that granting relief would not prejudice the government, so it granted 60 days from the date of the letter to file the missing election statements. The IRS did not decide whether the elections were otherwise valid or whether the income actually qualified for the exclusion.

Ruling snapshot

• Question: Should the taxpayer get an extension of time to make late GILTI high-tax exclusion elections for two tax years?
• Outcome: Approved (60-day extension granted)
• Key authorities: IRC § 951A; Treas. Reg. §§ 1.951A-2(c)(7)(viii), 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202552016 Third Party Communication: None
Release Date: 12/26/2025 Date of Communication: Not Applicable
Index Number: 9100.00-00, 9100.22-00,
951A.00-00, 951A.02-00 Person To Contact:
------------------, ID No. -----------------
--------------------- Telephone Number:
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------------------------- Refer Reply To:
------------ CC:INTL:B02
------------------------- PLR-114410-25
Date:
October 01, 2025

            TY: ---------------

Legend

Taxpayer = ------------------------------------------------
Members of Taxpayer's CFC Group = 1. ---------------------------------------------------
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Tax Year 1 = -----------------------------------------------
Tax Year 2 = -----------------------------------------------
Date = ---------------------
Accounting Firm = --------------------------
PLR-114410-25 2

Dear ------------:

This letter responds to a letter dated July 29, 2025 submitted on behalf of Taxpayer, by
its authorized representatives, requesting an extension of time under Treas. Reg.
§301.9100-3 to file an election. Specifically, Taxpayer requests permission to make a
global intangible low-taxed income ("GILTI") high-tax exclusion election ("GILTI HTE
Election") under Treas. Reg. §1.951A-2(c)(7)(viii) with respect to each controlled foreign
corporation (as defined in section 957(a)) ("CFC") that is a member of a CFC Group (as
defined in Treas. Reg. §1.951A-2(c)(7)(viii)(E)(2)(i)), for the CFC inclusion year (as
defined in Treas. Reg. §1.951A-1(f)(1)) that ends with or within Taxpayer's U.S.
shareholder inclusion years (as defined in Treas. Reg. §1.951A-1(f)(7)), Tax Year 1 and
Tax Year 2.

FACTS

Taxpayer, a domestic corporation, is the common parent of a U.S. consolidated group
("Taxpayer consolidated group"). During Tax Year 1 and Tax Year 2, members of the
Taxpayer consolidated group directly or indirectly wholly owned each member of
Taxpayer's CFC Group. With respect to Tax Year 1 and Tax Year 2, members of the
Taxpayer consolidated group were the sole United States shareholders ("U.S.
shareholders") that are the controlling domestic shareholders (as defined in Treas. Reg.
§1.964-1(c)(5)) of each member of Taxpayer's CFC Group.

During all relevant years, Taxpayer did not have an internal tax department, and the
individuals in its internal accounting and finance department had limited tax knowledge.
As a result, Taxpayer engaged Accounting Firm for tax compliance services. As its tax
return preparer, Accounting Firm was responsible for (i) determining required tax filings,
elections, and disclosures for the relevant taxable year, (ii) preparing, reviewing, and filing
the consolidated U.S. federal income tax return, and (iii) preparing, reviewing, and filing
U.S. information returns and disclosures, including Forms 5471 and GILTI HTE Election
statements, for the Taxpayer's CFC Group. Accounting Firm is a large international
accounting firm that routinely prepares and files tax returns for multinational corporations.

For Tax Year 1 and Tax Year 2, Taxpayer provided Accounting Firm with all necessary
information to properly prepare and file its consolidated U.S. federal income tax returns.
Taxpayer relied on Accounting Firm to determine its eligibility to make the GILTI HTE
Election with respect to its CFC Group and to prepare and file all necessary statements
to timely make the GILTI HTE Election. Accounting Firm discussed the applicability and
effect of the GILTI HTE Election with Taxpayer's internal accounting and finance
department and pursuant to these discussions, Taxpayer agreed that a GILTI HTE
Election would be made for Tax Year 1 and Tax Year 2.
PLR-114410-25 3

For each of Tax Year 1 and Tax Year 2, Accounting Firm prepared and timely filed a Form
1120 for the Taxpayer consolidated group. Taxpayer's Tax Year 1 and Tax Year 2 returns
were prepared consistent with the intention of making the GILTI HTE Election. As a result,
the tentative gross tested income items that Accounting Firm determined qualified for
exclusion were not taken into account in the consolidated taxable income reported on
Taxpayer's Forms 1120 for Tax Year 1 and Tax Year 2. However, due to inadvertent
oversights, Accounting Firm failed to include a statement reflecting Taxpayer's GILTI HTE
Election as required by Treas. Reg. §1.951A-2(c)(7)(viii) (a "GILTI HTE Election
Statement") with the tax returns for Tax Year 1 and Tax Year 2.

On Date, in connection with a due diligence review, a third party identified that GILTI HTE
Election Statements had not been included with the Forms 1120 filed for Tax Year 1 and
Tax Year 2 and alerted Taxpayer to the omissions. By Date, the 24-month window
prescribed in Treas. Reg. §1.951A-2(c)(7)(viii)(A)(2)(i) for making a GILTI HTE Election
on an amended return for Tax Year 1 and Tax Year 2 had lapsed. Shortly after Date,
Taxpayer consulted Accounting Firm to determine the steps to correct the omissions.
Accounting Firm advised Taxpayer to request relief under Treas. Reg. §§301.9100-1 and
301.9100-3 to make late GILTI HTE Elections for Tax Year 1 and Tax Year 2.

In connection with this ruling request, Taxpayer has made the following representations:

1. Taxpayer and the Taxpayer consolidated group are not currently under
   examination for Tax Year 1, Tax Year 2, or any other year in which any issue with
   respect to the GILTI HTE Elections is presented on a return.

2. Making the GILTI HTE Election for each of Tax Year 1 and Tax Year 2 will not
   result in any additional tax liability for Tax Year 1, Tax Year 2, or any other year for
   which assessment is barred under section 6501(a), such that there would be a tax
   liability that could not be assessed or collected as a result of the GILTI HTE
   Elections.

3. The request for relief was filed before the failure to make the GILTI HTE Election
   was discovered by the IRS.

4. Granting the relief will not result in Taxpayer having a lower tax liability in the
   aggregate for all taxable years affected by the GILTI HTE Election than it would
   have had if the election had been timely made.

5. Taxpayer does not seek to alter a return position for which an accuracy related
   penalty has been or could be imposed under section 6662 at the time this request
   for relief was made.
   PLR-114410-25 4

6. Taxpayer is not using hindsight in making the decision to seek the relief requested.
   No specific facts have changed since the due date for making the election that
   would make the election more advantageous to Taxpayer.

LAW AND ANALYSIS

Section 951A(a) provides that a U.S. shareholder of any CFC for any taxable year of the
U.S. shareholder must include in gross income the shareholder's GILTI for that taxable
year.

Section 951A(b) provides that the term GILTI means, with respect to any U.S. shareholder
for any taxable year of such U.S. shareholder, the excess (if any) of such shareholder's
net CFC tested income for such taxable year, over such shareholder's net deemed
tangible income return for such taxable year.

Section 951A(c)(1) generally provides that the term "net CFC tested income" means, with
respect to any U.S. shareholder for any taxable year, the excess (if any) of the aggregate
of such shareholder's pro rata share of the tested income of each CFC with respect to
which such shareholder is a U.S. shareholder for such taxable year of such U.S.
shareholder, over the aggregate of such shareholder's pro rata share of the tested loss
of each CFC with respect to which such shareholder is a U.S. shareholder for such
taxable year of such U.S. shareholder.

Section 951A(c)(2)(A) provides that the term "tested income" means, with respect to any
CFC for any taxable year of such CFC, the excess (if any) of the gross income of such
corporation determined without regard to certain items of income, including any gross
income excluded from the foreign base company income (as defined in section 954) and
the insurance income (as defined in section 953) of such corporation by reason of section
954(b)(4), over the deductions (including taxes) properly allocable to such gross income
under rules similar to the rules of section 954(b)(5) (or to which such deductions would
be allocable if there were such gross income).

Treas. Reg. §1.951A-2(c)(7)(i) generally provides that for purposes of determining the
tested income of a CFC, a tentative gross tested income item (determined under Treas.
Reg. §1.951A-2(c)(7)(ii)(A)) qualifies for the GILTI HTE Election only if that election is
effective with respect to the CFC for the CFC inclusion year and the tentative tested
income item with respect to the tentative gross tested income item was subject to an
effective rate of foreign tax that is greater than 90 percent of the maximum rate of tax
specified in section 11.
PLR-114410-25 5

Treas. Reg. §1.951A-2(c)(7)(viii)(A)(1) provides that the GILTI HTE Election is made by
the controlling domestic shareholder with respect to a CFC for a CFC inclusion year by
(i) filing the statement required under Treas. Reg. §1.964-1(c)(3)(ii) with a timely filed
original federal income tax return, or with an amended federal income tax return, for the
U.S. shareholder inclusion year of each controlling domestic shareholder in which or with
which such CFC inclusion year ends; (ii) providing any notices required under Treas. Reg.
§1.964-1(c)(3)(iii); and (iii) providing any additional information required by applicable
administrative pronouncements.

Treas. Reg. §1.951A-2(c)(7)(viii)(A)(2)(i) generally provides that a controlling domestic
shareholder may make the GILTI HTE Election with an amended federal income tax
return, duly filed within 24 months of the unextended due date of the original federal
income tax return for the U.S. shareholder inclusion year with or within which the CFC
inclusion year ends.

Treas. Reg. §1.951A-2(c)(7)(viii)(E)(1) provides that if a CFC is a member of a CFC
Group, the GILTI HTE Election is made with respect to all CFCs that are members of the
CFC Group.

Treas. Reg. §1.951A-2(c)(7)(viii)(E)(2)(i) provides that a CFC Group means an affiliated
group as defined in section 1504(a) without regard to section 1504(b)(1) through (6),
except that section 1504(a) is applied by substituting "more than 50 percent" for "at least
80 percent" each place it appears, and section 1504(a)(2)(A) is applied by substituting
"or" for "and." For purposes of Treas. Reg. §1.951A-2(c)(7)(viii)(E)(2)(i), stock ownership
is determined by applying the constructive ownership rules of section 318(a), other than
section 318(a)(3)(A) and (B), by applying section 318(a)(4) only to options (as defined in
Treas. Reg. §1.1504-4(d)) that are reasonably certain to be exercised as described in
Treas. Reg. §1.1504-4(g), and by substituting in section 318(a)(2)(C) "5 percent" for "50
percent."

Treas. Reg. §1.951A-2(c)(7)(viii)(D) provides that a GILTI HTE Election is valid only if all
the requirements in Treas. Reg. §1.951A-2(c)(7)(viii)(A) are satisfied.

Treas. Reg. §301.9100-1(c) provides that the Commissioner may grant a reasonable
extension of time to make a regulatory election, or a statutory election (but no more than
six months except in the case of a taxpayer who is abroad), under all subtitles of the
Internal Revenue Code, except subtitles E, G, H, and I.

Treas. Reg. §301.9100-1(b) defines the term "regulatory election" as an election whose
due date is prescribed by a regulation published in the Federal Register or a revenue
PLR-114410-25 6

ruling, revenue procedure, notice, or announcement published in the Internal Revenue
Bulletin.

Treas. Reg. §301.9100-2 provides automatic extensions of time for making certain
elections.

Treas. Reg. §301.9100-3 provides rules for requesting extensions of time for regulatory
elections that do not meet the requirements of Treas. Reg. §301.9100-2. It provides that
these requests for relief are granted when the taxpayer provides the evidence (including
affidavits) to establish to the satisfaction of the Commissioner that the taxpayer acted
reasonably and in good faith, and the grant of relief will not prejudice the interests of the
Government.

Treas. Reg. §301.9100-3(b)(1)(i) provides that a taxpayer is deemed to have acted
reasonably and in good faith if, among other factors, the taxpayer requests relief before
the failure to make the regulatory election is discovered by the IRS. Alternatively, Treas.
Reg. §301.9100-3(b)(1)(v) provides that a taxpayer is also deemed to have acted
reasonably and in good faith if the taxpayer reasonably relied on a qualified tax
professional, including a tax professional employed by the taxpayer, and the tax
professional failed to make, or advise the taxpayer to make, the election.

Treas. Reg. §301.9100-1(a) provides that granting an extension of time for making an
election is not a determination that a taxpayer is otherwise eligible to make the election
or that a taxpayer complied with the other requirements for a valid election.

CONCLUSION

Based on the facts provided and representations made, we conclude that the
requirements of Treas. Reg. §§301.9100-1 and 301.9100-3 have been satisfied.
Taxpayer is hereby granted an extension of time of sixty (60) days from the date of this
letter to file the GILTI HTE Election statements with respect to Taxpayer's CFC Group for
Tax Year 1 and Tax Year 2.

The rulings contained in this letter are based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party. While this office has not verified any of the material submitted in
support of the request for the rulings, it is subject to verification on examination.

Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in this
letter.
PLR-114410-25 7

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that
it may not be used or cited as precedent.

A copy of this letter must be attached to any income tax return to which it is relevant.
Alternatively, taxpayers filing their returns electronically may satisfy this requirement by
attaching a statement to their return that provides the date and control number of the letter
ruling.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.

                                           Sincerely,

                                           /s/ Mallory E. Mendrala

                                           Mallory E. Mendrala
                                           Acting Deputy Associate Chief Counsel (Technical)
                                           Associate Chief Counsel (International)

cc: -----------------------------------------------

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